Annual Report 2004 CORPORACIÓN MAPFRE SISTEMA MAPFRE

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2 Annual Report 2004 CORPORACIÓN SISTEMA 231

3 General information SISTEMA (hereinafter referred to as '' or 'SISTEMA ') is an independent Spanish group, which conducts insurance, reinsurance, financial, real estate and service activities in Spain and another 38 countries. These activities are carried out through a total of 244 companies, which are grouped under Operating Units with extensive management autonomy, under the co-ordination and supervision of the senior management bodies of SISTEMA, which lay down the general guidelines and common policies under which the whole Group must operate and approve the strategic lines and objectives of the various Units and companies, as well as the most important decisions and investments. The parent company of SISTEMA is MUTUALIDAD DE SEGUROS Y REASEGU- ROS A PRIMA FIJA (' MUTUALIDAD') which specialises in motor insurance in Spain. SIS- TEMA also includes 102 joint-stock companies registered in Spain and 141 in other countries, plus six private foundations, which conduct non-profit making activities as SISTEMA 's contribution to the general interests of society. Most of the aforementioned joint-stock companies (203) are grouped under holding company CORPORACIÓN, whose shares are listed on the continuous market of the Madrid and Barcelona Stock Exchanges and form part of the IBEX 35 index, which includes the thirty-five most traded and liquid stocks in the Spanish markets, as well as of the international indexes DOW JONES Stoxx Insurance and FTSE Euromid. 232

4 Annual Report 2004 CORPORACIÓN SISTEMA has established an important strategic alliance with the CAJA DE AHORROS Y MONTE DE PIEDAD DE MADRID ('CAJA MADRID'), the parent company of the fourth largest Spanish financial group. This alliance responds to the aim of achieving a more efficient management of the insurance and banking activities of both Groups by means of: The partial integration of the businesses referred to above in Spain through holding company - CAJA MADRID and through BANCO DE SERVICIOS FINANCIEROS CAJA MADRID -, with taking a majority holding in the insurance companies and CAJA MADRID in banks. The full exploitation of the potential of the networks of both groups in the distribution of banking and insurance products. The sharing of the results of the integrated activities between both groups, with taking 51% of the profits of insurance activities and 49% of the profits of banking activities and CAJA MADRID taking 49% of the former and 51% of the latter. This alliance is complemented by other shareholdings of CAJA MADRID in companies of SISTE- MA ( AMÉRICA and subsidiaries of AMÉRICA VIDA), and by in companies of the CAJA MADRID Group (GESMADRID, CAJA MADRID PENSIONES and CAJA MADRID BOLSA). The parent company of SISTEMA is MUTUALIDAD which specialises in motor insurance in Spain 233

5 Presence in Spain has the most extensive distribution network in the Spanish insurance sector and one of the largest of all financial companies. At the close of 2004, the said network comprised: 352 direct offices with their own manager and staff 2,289 delegations run by professional agents 147 offices in the FINISTERRE network 21,247 agents and associates Distribution network in Spain BALEARIC ISLANDS CANARY ISLANDS Sta. Cruz de Tenerife Las Palmas SISTEMA 2,788 CAJA MADRID 1,

6 Annual Report 2004 CORPORACIÓN SISTEMA All these offices are grouped under 40 sub-centres, which direct and co-ordinate the activities of the network in a given area, which normally coincides with one or several provinces, and which in turn are grouped under seven regional head offices (Andalusia; Catalonia; the Centre; the East; Madrid, Balearic and Canary Islands; the Northwest; and the North). Sub-centres REGIONAL GENERAL HEAD OFFICES NORTHWEST NORTHWEST NORTH CATALONIA REGIONAL GENERAL HEAD OFFICES MADRID, BALEARIC ISLANDS AND CANARY ISLANDS REGIONAL GENERAL HEAD OFFICES NORTH REGIONAL GENERAL HEAD OFFICES CATALONIA EAST ANDALUSIA REGIONAL GENERAL HEAD OFFICES CENTRE REGIONAL GENERAL HEAD OFFICES EAST CENTRE MADRID, BALEARIC ISLANDS AND CANARY ISLANDS REGIONAL GENERAL HEAD OFFICES ANDALUSIA 235

7 International presence The companies of SISTEMA operate in a total of 38 countries in addition to Spain. In 14 of them, SISTEMA has companies which operate in Direct Insurance. The Assistance business, which is present directly in 37 countries, has the largest international presence. Lastly, there are representative offices for accepting reinsurance in 16 countries. In all these countries, SISTEMA had 1,024 offices and a total of 9,562 employees at the end of By geographic area, the largest presence is on the American Continent (21 countries), followed by Canada Europe (13), Asia (3) and Africa (1). United States Mexico Russia Dominican Republic Guatemala Honduras Puerto Rico El Salvador Nicaragua Costa Rica Panama Venezuela Colombia Ecuador Brazil Ireland Peru Bolivia Paraguay United Kingdom Luxembourg Belgium Germany Chile Uruguay Argentina France Hungary Italy Portugal Andorra Turkey Greece Tunisia 236

8 Annual Report 2004 CORPORACIÓN SISTEMA The largest international presence corresponds to Assistance activity, with direct presence in 37 countries Canada United States Mexico Guatemala Honduras El Salvador Canada Nicaragua Costa Rica Panama Colombia Ecuador United States Dominican Republic Bahrein Puerto Rico Venezuela Brazil Mexico Peru Bolivia Dominican Republic Guatemala Honduras Puerto Rico Paraguay El Salvador Nicaragua Chile Costa Rica Panama Venezuela Uruguay Colombia Ecuador Argentina China Bahrein The Philippines Peru Chile ASSISTANCE REINSURANCE DIRECT INSURANCE Brazil Bolivia Paraguay Uruguay Argentina Bahrein ASSISTANCE 237 REINSURANCE

9 Ratings In accordance with standard financial market practices, MUTUALIDAD, CORPORACIÓN and some other companies have been rated by various credit rating agencies, either due to legal requirements, or for other reasons beneficial to s debt issuance. The following table reflects the grades or ratings assigned to the main companies of SISTEMA in accordance with the international scales used by said agencies. In addition, there are other ratings assigned to other subsidiaries, to which local scales are applied. It is worth noting that in fiscal year 2004 STANDARD & POOR'S has affirmed its ratings assigned to the main companies of SISTEMA : MUTUALIDAD ('AA'), CORPORACIÓN MAP- FRE ('AA-') and RE ('AA-'). A.M. BEST has also confirmed the ('A+') ratings assigned to MUTUALIDAD, RE and ASISTENCIA; and MOODY'S has affirmed its ('A1') rating assigned to ASISTENCIA. These excellent ratings received by the SISTEMA companies reflect the rating agencies confidence in their strong capitalisation, market leadership and operating results. 238

10 Annual Report 2004 CORPORACIÓN SISTEMA Standard & Poor s A.M. Best COMPANY MUTUALIDAD AA (Excellent) AA (Excellent) A+ (Superior) Positive outlook A+ (Superior) Positive outlook CORPORACIÓN AA- (Excellent) (issuer credit rating) AA- (Excellent) (issuer credit rating) aa- Positive outlook (issuer credit rating) aa- Positive outlook (issuer credit rating) RE AA- (Excellent) AA- (Excellent) A+ (Superior) Positive outlook A+ (Superior) Positive outlook REINSURANCE CORPORATION A (Excellent) A (Excellent) PRAICO A (Excellent) A (Excellent) TEPEYAC A- (Excellent) A- (Excellent) MOODY S A.M. Best COMPANY ASISTENCIA A1 Stable outlook A1 Stable outlook A+ (Superior) A+ (Superior) 239

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12 Annual Report 2004 CORPORACIÓN SISTEMA FOUNDATIONS BANCO DE SERVICIOS FINANCIEROS CAJA MADRID- (49%) SEGUROS GERAIS S.A. (75%) MOTOR INSURANCE UNIT AGROPECUARIA S.A. (100%) AMÉRICA VIDA (88%) SPECIALISED SUBSIDIARIES (56%) CAJA MADRID HOLDING (51%) LIFE AND SAVINGS AND INVESTMENT UNIT (100%) GENERAL INSURANCE UNIT (100%) CAJA SALUD (100%) COMMERCIAL INSURANCE UNIT (100%) REINSURANCE UNIT (88%) ASSISTANCE UNIT (100%) AMERICA UNIT (85%) INMUEBLES (100%) VIDA SEGUROS GENERALES SUBSIDIARIES INDUSTRIAL RE ASISTENCIA AMÉRICA SUBSIDIARIES INVERSIÓN GUANARTEME MUSINI REINSURANCE CORPORATION SUBSIDIARIES (SIAM) SUBSIDIARIES VIDA PENSIONES OTHERS SUBSIDIARIES CAUCIÓN Y CRÉDITO BRANCHES AND REPRESENTATIVE OFFICES ABROAD ASISTENCIA ORO AND QUAVITAE OTHERS SUBSIDIARIES SUBSIDIARIES TRAVEL AGENCY 241

13 Results of SISTEMA CORPORACIÓN is a subsidiary of MUTUALIDAD, the leading Motor insurer in Spain, which owns 55.7% of its share capital. Together with their respective subsidiaries they form SISTEMA, which in 2004 reached total revenues of _ 10,577.2 million, a 14.4% increase over the previous year, and a net consolidated profit after taxes of _ million, a 23.1% increase. The consolidated profit and loss account of SISTEMA is shown in the following table: RESULTS OF SISTEMA % Var. 04/03 NON-LIFE TECHNICAL ACCOUNT Gross written and accepted premiums 6, , % Unearned premiums and claims reserve % Claims -4, , % Acquisition expenses -1, % Other technical expenses % Result, ceded and retroceded reinsurance % Investment income and expenses % Result, Non-Life technical account % LIFE TECHNICAL ACCOUNT Gross written and accepted premiums 2, , % Unearned premiums and claims reserve Claims and variation in mathematical reserves -2, , % Acquisition expenses % Other technical expenses % Result, ceded and retroceded reinsurance Investment income and expenses % Result, Life technical account % Result of the technical account % NON TECHNICAL ACCOUNT Income and expenses from investments, own funds % Amortisation of goodwill % Other non-tecnical income and expenses % Extraordinary income % Result of the non-technical account Profit before tax and minority interests % Taxes % Profit after taxes % NON-LIFE RATIOS Gross Expense Ratio % 21.1% Gross Loss Ratio % 67.5% Combined Ratio % 92.6% Figures in millions of euros 1 as a % of premiums earned. 2 as a % of net premiums earned. 242

14 Annual Report 2004 CORPORACIÓN SISTEMA Acknowledgements and mentions 243

15 Since the date of the previous annual report, 89 employees as well as the following senior managers, have concluded or are about to reach the end of their active working life: Mr. José Luis Quílez Roche, who joined in 1984, and has held the positions of General Manager of SDOMSA (Organisation and Mechanisation Services), IT Director of MUTUALIDAD, Chairman of SOFT and General Manager of MAPINFO ( INFORMATICA, A.I.E.). Mr. Fausto Rodríguez del Coso, who joined in 1974, and has held, among others, the positions of General Manager of INMOBILIARIA (IMSA), General Manager of Promociones Urbanísticas, S.A. (PROURBASA) and Chairman of INMUEBLES. Mr. José Antonio Moreno Rodríguez, who joined in 1980, and has held, during the course of his employment career many different positions, among which: Deputy General Manager of MUTUALIDAD; General Manager of SEGUROS GENERALES; General Manager of BANCO ; and Executive Vice-Chairman of AGROPECUARIA. Mr. Angel Luis Segura Bautista, who joined in 1966, and has held, among others, the positions of Director of Personnel of MUTUALIDAD and Director of Personnel Management of SISTEMA. Ms. Mª Jesús Fernández Antón, who joined in Her employment career has been fundamentally tied to VIDA, where she has successively held, among others, the positions of Director of Actuarial Services, Sub-General Manager, Deputy General Manager and Vice-Chairman. Mr. Juan Jesús Berlanga García, who joined in 1970, and has held, among others, the positions of Regional Manager of VIDA, Sales Manager of INDOSUEZ, Sales Manager of INVERSIÓN and Deputy General Manager of this same company. Mr. Jesús García Arranz, who joined in 1971 Grupo CIC, and subsequently. Among the many positions he has held during the course of his employment career those worthy of mention are General Manager of CENTRAL SEVILLANA DE CRÉDITO, General Manager of FINANZAS, and Manager of 's sub central of Western Andalusia. 244 Tribute to Pedro Unzueta

16 Annual Report 2004 CORPORACIÓN Acknowledgements and mentions Mr. Eugenio Ramos González, who started his professional career with in 1972 during which he held the positions of National Manager of Adjusters, Manager of the Motor Area of AMÉRICA, General Manager of SEGUROS GENERALES of COLOMBIA, General Manager of PRAICO, and General Manager of PARAGUAY. Mr. Andrés Fernández Avilés, who joined in 1984 as General Manager of the Representative Office of RE in Mexico and has held this position until 31 January Mr. Rufino Garay joined LA CENTRO AMERICANA (El Salvador) in December 1972 as Director - General Manager and in 1999 was named Chairman. Since the date of the publication of the previous annual report, the following have left or will leave the governing bodies of SISTEMA due to reaching the established age limit: Mr. Pedro Unzueta Uzcanga, member of the Board of Directors of MUTUALIDAD and CORPORA- CIÓN and of the Institutional Control Committee and Vice-Chairman of the Board of Directors of ASISTENCIA; Mr. Dewey Clark, member of the Board of Directors of MAP- FRE REINSURANCE CORPORATION; and Mr. Angel Oso Cantero, member of the Board of Directors of CAJA SALUD. Likewise, the following have resigned for personal reasons from their positions: Mr. Pedro Guillén García, member of the Board of Directors of CAJA SALUD, and Mr. Miguel Márquez Osorio, member of the Board of Directors of AGROPE- CUARIA. Furthermore, due to the fact that directors appointed from non-management personnel are not eligible for re-election, Ms. María Teresa Mutiloa Lecumberri ( MUTUALIDAD) will cease to hold her position. The following have ceased representing the CAJA MADRID Group in SISTEMA companies: Ms. Elena Gil García (-CAJA MADRID HOLDING, AMÉRICA and AMÉRICA VIDA), Mr. Mariano Pérez Claver and Mr. Enrique de la Torre Martínez ( VIDA), Mr. Javier Tello Bellosillo (-CAJA MADRID HOLDING), and Mr. Fernando Sobrini Aburto ( CAUCIÓN Y CRÉDITO). Mr. Pedro Guillén García (due to personal reasons) and Mr. Jesús Paylos González have resigned from their positions with FUNDACIÓN MEDICINA. 245

17 The following regional directors have also resigned for various reasons: Mr. Pedro Tartu San Millán (Castilla); Mr. Juan Palop Cardona, Mr. Ramón Bagó Aguilló, Mr. Enrique Bonmartí Boxá, Mr. Arcadi Garay Soler, Mr. Buenaventura González Guerrero, Mr. Rafael Lluis Gisbert and Mr. Luis Vinyes i Jorda (Cataluña); Mr. Fernando Rodríguez Lafuente (Center); Mr. David Alfonso Amaya, Ms. Pilar Blanco-Morales Limones, Mr. Alejandro Gomero Rodríguez, Mr. José María Hernández Aparicio, Mr. Francisco Vinagre Jara (Extremadura); Mr. José Calvo Cid (Galicia); Mr. José Antonio Ciganda Archanco, Mr. Manuel González García, Mr. Fernando Ceña Jodrá, Mr. Isaac Muga Caño, Mr. Miguel Angel Alustiza Zubire and Mr. Luis Bruno Cabeza (North center); and Mr. Pedro Unzueta Uzcanga, Mr. Jaime Laffitte Mesa, Mr. Juan Antonio Careaga Muguerza, Mr. Andrés Fernández del Cotero Muñoz and Mr. José María Camiña Borda (North). would like to express its thanks to all the above for their contribution. It also wishes to express the thanks of SISTEMA to all directors, managers, employees, delegates, agents and colleagues who have made the excellent results obtained in 2004 possible through their commitment and success. IN MEMORIAM Since the preparation of the previous report, three employees have passed away as well as retired managers Mr. Arturo Fernández Pacheco and Mr. Mariano Pellús Ruiz, and regional director Mr. José Cobo Menéndez. wishes to express in this report its regret, condolences and solidarity with their respective families. 246

18 Design and layout: Tau Printed by: Monterreina Copyright: M This booklet contains the Consolidated Management Report and Consolidated Annual Accounts together with the Auditors' Report of CORPORACIÓN S.A., as well as miscellaneous additional information. The company will make the Individual Management Reports and Annual Accounts together with the corresponding Auditors' Report available to its shareholders and other interested parties.